Put in place proper mechanism on uncollected taxes, TRA urged

THE Controller and Auditor General (CAG), Prof Mussa Assad, has appealed to Tanzania Revenue Authority (TRA) to enhance debt management, enforcement and recovery mechanisms in order to collect all due taxes, having discovered uncollected tax of over 588bn/-.

Such mechanism, he said, would avoid long outstanding taxes in arrears from assessment made through the Selfassessment, Tax Investigation Department, Examination Unit and Tax Audit Unit.

“My review of Tax Investigation Register, Tax Arrears Register and other supporting documents noted uncollected taxes amounting to 588,833,422,160/-,”Prof Assad said in his Central Government Annual General Report 2015/16 financial year.

Out of such amount, he said, a sum of 70,974,430,676/- relates to Large Taxpayer Department, including an interest of 3,446,958,859/60, another sum of 92,025,604,941/- relates to Tax Investigation Department and 425,833,386,543/07 relates to Domestic Revenue Department for 10 tax regions. The amount, according to him, was inclusive of interests computed on four tax regions amounting to 31,002,818,053/75 and unsupported tax recoveries of 9,451,269,539/73.

The regions are Kilimanjaro, Temeke, Mbeya, Dodoma, Mtwara, Iringa, Morogoro, Shinyanga, Tanga, Ilala, Mwanza and Kinondoni.

“Presence of such taxes in arrears raises questions as to why the Authority failed to collect assessed taxes on time or enforce recovery measures whenever possible as the law requires,” the CAG said in his report presented before the National Assembly here on Thursday. In his view, he said, inadequate debt recovery and enforcement mechanisms, especially in TRA Regional Offices contributed significantly to the existence of long outstanding taxes in arrears.

“This amiss signifies that there is room for improvement in debt management and recovery mechanisms,” he said.

Prof Assad further pointed out that his review of the sample of taxpayers files and other relevant documents, such as taxpayers returns of income, VAT special relief beneficiary records, VAT returns and declarations filed by the taxpayer, noted underassessment of taxes payable by 7,534,260,240/-.

Out of that tax liability, he said, a sum of 1,309,978,057/42 relates to a sample of six VAT return reports at Large Taxpayer Department and 6,224,282,182/36 for tested taxpayers from 12 tax regions under the Domestic Revenue Department.

He said that under-assessment was attributed to inadequate reviews and analyses of taxpayers’ information by the Authority and at times failure to collate self-assessed taxable income in the Final Returns of Income, VAT returns and Declarations filed by taxpayers with that of TRA records.

“My review, therefore, noted that self-assessment returns were not well reviewed which, in turn, offers opportunity for collusive practices and abuse of self-assessment system by unscrupulous persons. Hence, denying the government its rightful revenue,” the CAG said.

Prof Assad suggests, therefore, for strengthening audit checks and investigations to reduce fictitious input-tax claimants from the VAT network and curb under-declarations in the income tax returns. He further recommends for investigation on all identified under-assessments and then recovers all payable taxes together with interest and penalty thereof as required by the tax laws.